Sleep Country Canada back on the TSX, but IPO price of $17 per share draws yawn

TORONTO – Sleep Country Canada returned to the public markets Thursday after seven years in private hands, but its IPO price of $17 a share drew something of a yawn from investors.

The country’s largest mattress retailer, which trades under the stock symbol (TSX:ZZZ), closed down 85 cents at $16.15, or five per cent below the target price.

Volume was just over five million shares, making it the third most active issue on the TSX.

For its IPO, Sleep Country Canada Holdings Inc. issued 17.65 million shares to underwriters at $17 per share for total gross proceeds of slightly more than $300 million.

The underwriters also have an over-allotment option for an additional 2,647,500 shares at the same price, which could add additional gross proceeds of up to $45 million.

Existing shareholders, including management, now own 53 per cent of the company, but their stake would slip to 46 per cent if the over-allotment is exercised in full.

Sleep Country was listed on the Toronto Stock Exchange as an income trust from 2003 to 2008, when it was bought out for $356 million by Birch Hill Equity Partners and Westerkirk Capital.

It owns and operates 215 stores across Canada under its own name and the Dormez-Vous? banner.